Plans for expansion into offshore wind power have been scaled back by two of the largest US industrial groups, following a rush by several companies to enter the market and concerns that high costs will slow the growth of demand.

General Electric and United Technologies Corporation, two of the largest US manufacturers, both made acquisitions and launched research and development projects to build turbines for offshore use.

Now both have said they plan to focus on onshore turbines, and are dropping or slowing down plans for growth in the offshore market.

Proposals for plants in the UK, which is expected to be the world’s largest market for offshore wind in the coming decade, have been dropped by UTC and put on hold by GE.

Offshore wind has attracted interest, particularly in Europe, because of space constraints on land. The UK has made a huge expansion of offshore generation the centrepiece of its plans for meeting European Union targets for cutting carbon dioxide emissions and developing renewable energy.

However, it is still only a relatively small fraction of the overall wind market. Worldwide, about 36,000 megawatts of wind capacity will be installed this year, of which only about 1,200MW will be offshore, according to IHS Emerging Energy Research.

The US does not yet have any offshore wind generation. Three US projects have signed power sales agreements but Cape Wind in Massachusetts, planned to be the first in operation, has faced fierce political and legal resistance.

GE said in a statement that it was “seeing lower demand than expected in the offshore wind segment” and “increased competition [was] pressuring profitability”.

It is considering rationalising its offshore wind operations in Norway and Sweden, with the possible loss of 40 jobs. A proposal for a turbine factory in Britain, launched last year, is still being studied. No more than eight of GE’s new 4MW offshore turbines have been ordered: one in Sweden and five to seven in the US.

GE said it “remains committed to the offshore wind business”. However, its focus has been on its new 1.6-100 turbine, designed for onshore areas with lower wind speeds, which already had about 300 orders on its launch in May.

UTC, meanwhile, has made clear that it had stopped work on offshore turbines that it began after buying Clipper Windpower last year. It said it planned to “explore every technology advancement before we launch a new product”, adding: “We do not rule out re-entering the offshore market in the future.”

The offshore market today is dominated by Siemens of Germany and Vestas of Denmark but other companies, including Areva of France, Gamesa of Spain and Doosan of Korea, have announced plans to expand in the industry.

Get alerts on Climate change when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Comments have not been enabled for this article.

Follow the topics in this article